Cypriot ministers were trying to revise a plan to seize money from bank deposits before a parliamentary vote today that will secure the island’s financial rescue or could leadto its default, with reverberations across the eurozone.

The weekend announcement that Cyprus would impose a tax on bank accounts as part of a €10 billion bailout by the European Union broke with previous practice that depositors’ savings were sacrosanct. The euro and stock markets fell on concern the eurozone crisis was returning.

Before the vote, which is too close to call, the Government was working to soften the blow to smaller savers by tilting more of the tax towards those with deposits greater than €100,000. Many of these depositors are Russian and the planned levy has already elicited an angry reaction from President Vladimir Putin.

The Government says Cyprus has no choice but to accept the bailout with the tax on deposits, or go bankrupt.

A Cypriot source said the introduction of a tax-free threshold for smaller bank deposits – may be up to €20,000 – was under discussion but not yet agreed.

The parliamentary speaker said debate on the bank levy would be delayed until this afternoon, suggesting banks, which were shut yesterday for a bank holiday, will remain closed today.

The eurozone has indicated that changes would be acceptable as long as the return of around €6 billion is maintained. If the Cypriot Parliament votes the deal down, the eurozone would face a risk of being dragged back into crisis.

“It is up to the Government alone to decide if it wants to change the structure of the ... contribution (from) the banking sector,” European Central Bank policymaker Joerg Asmussen, who was pivotal in the weekend negotiations, told reporters on the sidelines of a Berlin conference.

“The important thing is that the financial contribution of €5.8 billion remains,” he said.

Residents on the island emptied cash machines to get their funds over the weekend. The move also unnerved depositors in the eurozone’s weaker economies. Investors feared a precedent that could reignite market turmoil that the European Central Bank has calmed in recent months with its pledge to do whatever it takes to save the euro. The euro fell before tempering losses. European stocks did similarly, dropping two per cent before more than halving losses.

In the bond market – often the most reliable guide to eurozone stress – safe haven German Bund futures shot up while Italian equivalents dived, suggesting some concern that Cyprus could infect its larger neighbours.

“The most important question is what would happen the following day if the bill isn’t voted,” Cyprus central bank governor Panicos Demetriades told Parliament.